How are UK pensions taxed in France? Rob Kay explains the rules and your options
If you are planning to retire in France, you’ve made a good choice; it’s the perfect place to enjoy your retirement. Most people rely on their pensions to cover their living expenses, and it’s important to understand how your UK pension income will be taxed in France once you become resident there.
Doing this research before you move helps you plan ahead, avoid unwelcome surprises, and gives you the opportunity to establish the most tax-efficient option for your circumstances and aims.
GENERAL RULES FOR UK PENSIONS
Under the terms of the UK/ France double taxation treaty, most UK pension income received by French residents is taxed in France, not in the UK. The exception is government service pensions (see below). Under French domestic law, retirement and disability pensions are taxed in a similar manner to salaries. You receive a 10% deduction (minimum €442 and maximum €4,321) per household, then pay tax at the scale rates of income tax.
Currently (so for 2023 income as rates are released in arrears), French income tax rates are:
France taxes the household, rather than individuals. Tax is calculated on the number of household members – parts familiales. This beneficial system reduces overall tax if one spouse has a higher income than the other or you have dependants living with you. Note that France applies a second tax on income – social charges. They are levied on all types of income and used to finance France’s social security (but are separate from social security contributions). The rate for pensions is 9.1%. If, however, you have a Form S1 and/or are not affiliated to the French social security system, you do not pay social charges on UK pension income.
UK STATE PENSIONS
A UK state retirement pensions is always taxable in France (except UK government service pensions), as above. It will be paid gross in the UK, so you just pay tax in France, but be aware that it can affect PAYE coding notices for any other income that remains UK taxable.
PERSONAL AND WORK PENSIONS
Personal/company/ occupational pension schemes are taxed as a pension and are liable to French income tax and social charges. They are not taxed in the UK.
UK pension companies normally deduct tax at source, so you need to arrange for them to pay it gross to avoid double taxation. In order for them to do this, you need to prove that you are tax resident in France and paying tax there.
HM Revenue & Customs has a form for this purpose: ‘France Individual DT’. You can download it from the HMRC website and then file it with your local French tax authorities, normally along with your first French tax return, before sending it to HMRC. HMRC then advises your pension provider to pay your income gross and reimburse any tax deducted at source in the in
